Despite the economic shocks that have rocked the global GDP
since 2008, Latin Americas economic growth has remained
above the world average. However, 2012 could be challenging in
terms of growth. Inflation and stronger currencies in Latin
America could slow economic expansion in the region. Most Latin
American countries will experience the effects of higher energy
prices and the likely recession in Western Europe, as well as the
recovering-but-weak US economy.

Venezuelas petrochemical industry has not grown
significantly over the last few years. Since 2009, Venezuela
has become more dependent on imported petrochemicals, including both basic
petrochemicals (ethylene) and derivatives (polyethylenes).

Several expansion programs announced between
2005 and 2009 have been delayed or canceled. Meanwhile, the
government, through PetroquÍmica de Venezuela
(Pequiven), continues to develop a methane-based industry, and
is increasing capacity for fertilizers and methanol production.

Political highlights. Since assuming the presidency in 1999,
Hugo Chavez has survived a coup, an oil strike and protest
movements against him. Of late, his most important battle has
not been with the opposition party but with health issues.

Venezuela held presidential elections in October and
reelected Chavez. New investments in the oil, energy and
petrochemical industries continue to depend on the outcome of
elections, thus underscoring the importance of Venezuelas
political environment on the domestic
petrochemical industry.

Natural gas. Among the regions major economies,
Venezuela holds the largest natural gas reserves, as shown in
Fig. 2. However, the lack of private
investment has crippled the supply and growth of
petrochemicals, primarily on the west coast of Venezuela.
Planned expansion of ethane-based capacity
at Jose, on the eastern coast of Venezuela, is all but
canceled. Braskem and Pequiven were working on the Jose project from 2007 to 2010, but both
companies are now looking into alternative feedstocks to support additional
polyolefin capacity growth in Venezuela.

Fig. 2. Global
natural gas reserves, 2010.

Petrochemical industry. Venezuela uses gas, associated with
crude oil production, to produce ethane as a feedstock for petrochemical production. Lower
crude oil production means reduced gas and ethane availability
at El Tablazo (now called Campo Industrial Ana Mariá
Campos or CIAMCA), where supply is now limited. Olefin plants
at CIAMCA continue to operate at reduced rates due to
inadequate ethane supply. Large capital investments and strong
government support will be necessary to increase gas
supplies.

Venezuela has four production sites for petrochemicals, as shown in
Fig. 3. The largest petrochemical site is
CIAMCA, located on the west coast. The Jose petrochemical site
on the east coast of Venezuela will continue to produce methane
derivatives such as ammonia, urea and methanol. The El Palito
refinery is equipped with a reformer
that feeds on condensates and produces benzene, toluene and
xylene for local markets. The Morón facility is mainly
for fertilizer production to supply local demand. It has
important ammonia- and urea-producing units and produces other
fertilizers, such as ammonium sulfate. Fig. 3
lists Venezuelas present petrochemicals capacity for
various base petrochemicals.

Fig. 3. Locations of
major refineries and
petrochemical complexes, along with
output
and production capacities in Venezuela.

Pequiven is revamping the Moron petrochemical site to
increase fertilizer production. There are also plans to
increase feedstock availability at the CIAMCA
petrochemical site. Pequiven is building a new ammonia plant to
produce fertilizers at its petrochemical site in Morón,
Carabobo State (21 km from Puerto Cabello). The new ammonia
plant is part of Pequivens strategy to double its
fertilizer production; Pequiven has just over 2 million tpy of
ammonia capacity at the CIAMCA site and the FertiNitro plant in
Jose.

Major changes in feedstock supplies are under evaluation at
Pequiven. Venezuela could expand olefins and derivatives
production through naphtha cracking or by tapping into refinery-rich streams from the
Paraguaná refinery. Meanwhile, Pequiven is working to
revamp existing facilities at CIAMCA and
Morón.

Brazilian petrochemicals producers Braskem
continues to evaluate Venezuelas feedstock situation,
looking to expand production capacity. Propilsur, the joint
venture created by Pequiven and Braskem to produce
polypropylene (PP) in Venezuela, is evaluating a propane
dehydrogenation unit near the Paraguaná refinery where,
Profalca, a local producer of polymer-grade propylene (PGP) has
a splitter to upgrade refinery-grade propylene for PGP
production. Meanwhile, Polinter is considering the construction of a naphtha cracker to
increase ethylene and polyethylene capacity in Venezuela. Other
basic petrochemicals, like aromatics and
heavy olefins, will be exported from this site when the project is completed. This project would redirect naphthas
currently exported as feedstock to supply a new,
800,000-tpy olefins cracker. New grassroot or large units are
not anticipated to come onstream sooner than 2017. These units,
when built, will be efficient, world-class facilities that will help supply
olefins and polyolefins to this region. HP

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